North Korea terror victims escalate fight to seize $71 million from Aave hack
Key takeaways
- By Sam Reynolds|Edited by Shaurya Malwa May 6, 2026, 5:09 a.m.
- "The law is crystal clear that a fraud victim passes title, not merely possession, to a fraudster… Charles Ponzi obtained, through his now-eponymous scheme, 'defeasible title' to his victims' cash," it continues.
- The dispute traces to a cross-chain bridge exploit last month that drained roughly $230 million from Aave, the largest decentralized lending protocol by total value locked.
By Sam Reynolds|Edited by Shaurya Malwa May 6, 2026, 5:09 a.m. 2 min read Make preferred on What to know: Lawyers for victims of North Korean terrorism now argue that April’s $71 million rsETH incident on Aave was fraud rather than theft, in a bid to preserve a court order freezing the funds.The filing invokes the Terrorism Risk Insurance Act to claim the frozen ether as North Korean state property and questions whether Aave has standing to challenge the freeze given its own terms saying it does not control user assets.The dispute stems from a cross-chain bridge exploit attributed to North Korea’s Lazarus Group that drained about $230 million from Aave, even as a separate DeFi recovery fund has raised more than four times the $71 million at issue, ahead of a May 6 federal court hearing in Manhattan.Lawyers seeking to seize $71 million in frozen ether for victims of North Korean terrorism changed their legal strategy Tuesday, arguing in a new court filing that the April 18 rsETH exploit was not theft but fraud, directly countering Aave’s attempt to void a restraining notice blocking the release of the assets.
In a 30-page opposition brief filed in the Southern District of New York, a lawyer representing the North Korean terror victims argues the exploit was not a smash-and-grab theft but a fraudulent lending transaction, and that under longstanding U.S. law, fraudsters who acquire property through deception can obtain legal title to it, even if that ownership is later reversible.
"The law is crystal clear that a fraud victim passes title, not merely possession, to a fraudster… Charles Ponzi obtained, through his now-eponymous scheme, 'defeasible title' to his victims' cash," it continues.